Digital Asset and DTCC complete US Treasury Collateral Network Pilot
23 September 2024 US
Image: Parradee/stock.adobe.com
Digital Asset and the Depository Trust and Clearing Corporation (DTCC) have completed a pilot to test collateral and margin optimisation through tokenisation.
The US Treasury Collateral Network Pilot focused on using distributed ledger technology (DLT) applications to support market connectivity across the collateral management lifecycle, and to enhance the mobility, liquidity, and transactional efficiency of tokenised assets.
Nadine Chakar, global head of DTCC Digital Assets, says: 鈥淭his pilot successfully demonstrated the power of tokenisation and its potential to enhance collateral mobility and unlock liquidity.鈥�
In the pilot, Digital Asset 鈥� along with four investors, four banks, two central counterparties, three custodians/collateral agents, and a central securities depository 鈥� operated 14 Canton nodes, connecting four types of cross-application transactions through 10 distributed applications, using DTCC鈥檚 LedgerScan solution to support tracking and governance of the assets.
According to Digital Asset, the participants successfully executed 100 transactions, demonstrating tokenised collateral assets' robust functionality and potential.
Kelly Mathieson, chief business development officer at Digital Asset, says: 鈥淭he successful completion of this pilot proves that tokenied assets could be leveraged to optimise collateral.
鈥淚n addition to the liquidity and operational efficiencies gained, the pilot demonstrates how tokenised collateral can improve market transparency, legal certainty of ownership in seizure/close out scenarios, and significant real-world benefits, including faster collateralisation and enhanced regulatory oversight.鈥�
Digital Asset and DTCC provided the infrastructure, applications, and connectivity for market participants to test complex business scenarios.
The pilot, conducted in June and July, used existing registry and margin applications from the Canton Network, with the network鈥檚 Global Synchronizer ensuring synchronisation and enabling atomic transactions across applications and parties.
Jenny Cieplak, a partner at global law firm Latham & Watkins, adds: "Most blockchain pilots focus on initiating or completing transactions, but in this pilot, that lifecycle was extended to include default.
鈥淭his is crucial because collateral isn't just about mitigating risk 鈥� it ensures that in the event of a default, secured parties can take legal possession of the collateral. This demonstrates blockchain鈥檚 potential to support the full lifecycle of financial transactions, beyond just execution.鈥�
This pilot builds on the Canton Network Pilot completed in December 2023, which established the foundation for composable applications across a global economic network.
The US Treasury Collateral Network Pilot focused on using distributed ledger technology (DLT) applications to support market connectivity across the collateral management lifecycle, and to enhance the mobility, liquidity, and transactional efficiency of tokenised assets.
Nadine Chakar, global head of DTCC Digital Assets, says: 鈥淭his pilot successfully demonstrated the power of tokenisation and its potential to enhance collateral mobility and unlock liquidity.鈥�
In the pilot, Digital Asset 鈥� along with four investors, four banks, two central counterparties, three custodians/collateral agents, and a central securities depository 鈥� operated 14 Canton nodes, connecting four types of cross-application transactions through 10 distributed applications, using DTCC鈥檚 LedgerScan solution to support tracking and governance of the assets.
According to Digital Asset, the participants successfully executed 100 transactions, demonstrating tokenised collateral assets' robust functionality and potential.
Kelly Mathieson, chief business development officer at Digital Asset, says: 鈥淭he successful completion of this pilot proves that tokenied assets could be leveraged to optimise collateral.
鈥淚n addition to the liquidity and operational efficiencies gained, the pilot demonstrates how tokenised collateral can improve market transparency, legal certainty of ownership in seizure/close out scenarios, and significant real-world benefits, including faster collateralisation and enhanced regulatory oversight.鈥�
Digital Asset and DTCC provided the infrastructure, applications, and connectivity for market participants to test complex business scenarios.
The pilot, conducted in June and July, used existing registry and margin applications from the Canton Network, with the network鈥檚 Global Synchronizer ensuring synchronisation and enabling atomic transactions across applications and parties.
Jenny Cieplak, a partner at global law firm Latham & Watkins, adds: "Most blockchain pilots focus on initiating or completing transactions, but in this pilot, that lifecycle was extended to include default.
鈥淭his is crucial because collateral isn't just about mitigating risk 鈥� it ensures that in the event of a default, secured parties can take legal possession of the collateral. This demonstrates blockchain鈥檚 potential to support the full lifecycle of financial transactions, beyond just execution.鈥�
This pilot builds on the Canton Network Pilot completed in December 2023, which established the foundation for composable applications across a global economic network.
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